EGYPT – The board of directors of the Egyptian Iron and Steel Company (EISC) have passed a resolution of liquidating the company and dividing it into two new entities, a company for iron and steel and another for mines and quarries.
The EISC has been one of the country’s industrial icons since its establishment in 1954 and start of operations in the early 1960s.
The move lays the groundwork for private sector investments to play a role in the two companies in the future, in light of the state’s plan to make use of its loss-making assets and untapped opportunities.
The EISC board said the decision was made as a result of the heavy losses that have been accumulating over the years, which hit EGP 9 billion (US$572.95m), EGP 982.8 million (US$62.57m) of which was lost between July 2019 and June 2020.
According to the balance sheet of the EISC, which is listed in the Egyptian Exchange (EGX), the company’s total value of assets witnessed a modest increase from 2017 through 2021.
The key activity of the company is the manufacturing of iron and steel products with the highest quality and lowest cost based on the needs of the local and global markets at a rate of up to 2.1 million metric tons, according to the company’s data.
The main products the company provided include hot rolled steel angles; hot round edge channels; hot rolled steel for general purposes; reinforced steel bar; hot rolled squares for general purposes; steel plates and steel sections; iron ore and iron oxides; green clay; oxygen convert slag and zinc doors; and industrial gases, such as oxygen, argon and nitrogen in both gas and liquid forms.
The company also produces spare parts and steel structures on customers’ requests and provides testing, rewinding, repair and revamping services for electric motors.
State-owned enterprises in emerging markets, especially in the southern and eastern Mediterranean, are playing a major role in primary sectors in these economies, stated a report by the European Bank for Reconstruction and Development (EBRD) in November.
According to the report, state-owned enterprises and the broader public sector, over the years, remain a critical source of the social contract in those economies, a source of jobs, and a part of the social safety net and an engine for public investment.
The report cited Egypt’s privatisation experience that had been applied in the 1990s, saying that when the state-owned enterprise sector was downsized in Egypt, it caused a culling of unproductive but relatively well-paid employment, yet it was not accompanied by sufficient strengthening of the social safety net or job creation in the private sector.
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